How to Set Candle Prices

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How to Set Candle Prices

It is always interesting to hear how people get started in the candle business for some it starts as a hobby and grows into a home based business and then continue to grow the operation until it becomes a self sustaining operation. (See Candlewic History). For others they start with an investment of some type with the full intention of growing the business into successful operation and others may have acquired an existing candle company.

No matter how you started or operate the business without the doubt one of the most important keys to the success of your business is what price you sell your candles for. Many would think this should be an easy formula, but with many factors to consider it is actually a very difficult process and every company/individual will arrive at there selling price for different reasons. The purpose of this article is to help identify the general price range and which markets to consider. No doubt, there are always exceptions and unique circumstances that will have an impact on these guidelines. With the current Economic situation your pricing strategy will be more important then ever.

The first question that needs to be answered is: How will you be selling your product?

retail store

craft shows

consignment store

wholesale

other

Each of these distribution channels dictates a generally accepted margin level.

A general guide to follow is: The closer you are to selling the consumer, the higher the margin you should attempt to achieve.

The closer you are to selling the consumer, the higher the margin you should attempt to achieve.

There are several reasons this logic prevails. The first reason is that you are taking most of the supply chain cost out of the equation, which allows you to make that money. The second reason is that you will have to handle more single transactions, which drives up your cost and time involved. Instead of selling 25, 50 or 100 candles at a time and sending 1 Invoice you may have to handle each of the transactions individually.

In most instances, in order to make it work, you need a minimum of a 40 percent margin with a maximum, depending on competition, up to possibly 60 percent.

Again, this is ideal but subject to many other factors. One that comes to mind is if you use candles to get people to your store or booth, and they purchase candle holders or accessories, maybe that percentage can be smaller.

The next selling venue to consider would be wholesale. In this selling mode, you produce the candles and sell to another entity that will market the product to the consumer. This allows you to focus on producing a good product and building your brand image and product development. The retailer/website then will sell your product.

Trade shows, trade publications and mailers to the potential customers is a great way to introduce your product. Starting with your local stores is always a great way to get started. You can deliver the product, thus saving shipping cost for the retailer, even manage the inventory and consider some joint advertising. The expected margin selling in this area will truly depend on how you wish to run your business. If you have low overhead and wish to try and get new customers quickly with price, maybe you only have a 33 percent. This is very low and you must really have a control on your cost to do this margin level. However, it is important not to sell them too low because of the many unknowns, i.e. production errors, sudden price increases and lost accounts.

The last selling venue is what we call a hybrid. There are several selling categories I would include in this one, since by definition they may not be a retailer or a distributor. The first one is fundraising, which is a very successful venue for candles. This would be where you produce the candles and have an organization selling your product to help raise funds for their purpose. Unlike wholesale, after the consumer purchases and likes your product, you can start to sell direct to the consumers that purchased candles as part of the fundraiser. Maybe even offer the organization a small commission on repeat orders.

Most times a 40-60 percent margin gives room for both the candle manufacturer and the group to make money at their event.
If you recall, earlier in this article we used the term preliminary cost because from time to time you may have to move off that pricing. If a large enough order comes in, you might want to give further discounts.

Without doubt, one of the most important things to consider when developing your cost is what the competition is doing. The important distinction in this process is to determine what truly constitutes a competitor. In most instances, the candles being sold in grocery stores are not always a competitor because the candle could be of a different quality. The brand name candle company may not be a competitor, because they have the ability to charge more for the name. You need to determine your target market and review the pricing of the candles being sold to those markets.

Once you have your pricing established be sure to review often, raw material pricing changes, your operating cost may increase/decrease or your competition might be doing something which is taking away sales. There have been recent articles that almost anything is open for negotiating be prepared to know what the very minimum you will want to sell your candle

I selected my fragrance and now wish to purchase dye to color my candles. I see you have it in Blocks, Liquid and Powder. How do I know which one to use?

Any of these forms of dye will work in candle making and it really depends on what size batches of candles you are making. Without doubt powdered dye will always be the most cost effective but at the same time they are extremely concentrated and virtually impossible to match colors in 4 pound batches. Powdered dyes are best suited when mixing in 100 + batches. The liquid dyes aren’t quite as concentrated as the powdered and a little easier to work with. By far the easiest to work with are the blocks, but they are not as concentrated. As you make larger batches the cost is more then the other forms.

Step 1
Lay wick across the edge of the wax sheet.
Position wick extending 1/2" (one-half) past the top
and 3" from the bottom of the wax. Roll the edge of
the wax over wick once, just far enough to cover the wick.

Step 2
Wrap piece of aluminum foil around the very
tip of the dowel or bamboo (to prevent the wood from
burning).

Step 3Lay 3" of dowel/bamboo beside the first
wrap of wax as prepared in Step 1.

Step 4
Heat well so the wax sticks well to your
dowel or bamboo. Tightly roll the whole sheet of wax
onto the dowel/bamboo. Keep the top and bottom of
your wax sheet even while rolling firmly. Your end
result should be a tightly rolled candle.

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It is hard to believe the year is coming to a close. We hope that everyone has a safe and happy holiday season and we look forward to working with everyone in 2010. I don't know about you but I just got used to writing 2009 on my checks. The staff and I wish to thank everyone for their business in 2009 and truly look forward to working with you in 2010. As many may know this will be our 38th year in business and we enjoy every moment and we have many exciting things planned in the upcoming year.

With Thanksgiving right around the corner using a turkey reference only seems appropriate. In full disclosure I must state that I have never cooked a turkey but have watched and read about the different techniques available. While doing the research I came across this website. I found it very interesting that, yes, candle making shares many similarities to cooking a turkey. Before you laugh to hard, I encourage you to read our newsletter and the referenced website and, by the end (I hope) you have a wonderful candle and a HAPPY THANKSGIVING and not be on a "Wild Turkey Hunt".

On behalf of Candlewic we would like to take this time and wish everyone an early HAPPY HALLOWEEN. Like some of the scary movies people watch this time of year they sometimes have the same experience when learning to make candles the first time. The terms used, how to choose the correct product and (if they get to it) how sell their candles, it can be a scary process.